To investigate the conditions of severe mental illnesses individuals by clinical characteristics, social adjustment, violent behavior, psychoactive substance use, and services use. The study had a cross-sectional design, followed by prospective cohort, with a one-year follow-up. Twenty mental health services (emergency, inpatient and outpatient services) were scrutinized to identify all patients aged 18 to 65 years old, with a clinical diagnosis of functional psychosis, who were resident in one of 7 administrative districts chosen for the study, and had had at least one contact with such services between 1 st September and 30 th November 1997. Assessments included psychiatric symptoms, social adjustment, violent behavior, patterns of alcohol, tobacco, drug use, and services use, using standardized instruments, at the baseline and 1 year after. Out of 620 patients identified, 404 were randomly selected to be interviewed. One hundred and ninety two patients (47.9%) were directly interviewed. The sample was then composed by 102 (52.3%) men, mean age was 41.5 years (s.d. = 11.4), predominantly single, not born in the city of Sao Paulo, with 8 years or less of formal education. The prevalence of substance abuse was 10,4% (95%CI: 6.5 to 15.6%), being 7,3% for alcohol abuse and 4,7% for drug abuse. The proportion of subjects showing any degree of impairment in social adjustment was very high, with almost 92% of the individuals with global scores of 1 to 5, but only 12.8% of the sample with scores 4 or 5. The most used health service was the psychiatry consultation. One hundred fifteen (59.9%; IC 95%: 52.6 to 66.9%) used tobacco in regular basis in the last year. Thirty-seven (19.4%, 95%CI 14-25.7%) subjects reported at least one episode of aggression in the 12 months prior to the interview, only 9 (4.7%) individuals reported more serious episodes of aggression, and just 2 (1%) episodes were considered severe. When analysing moderate and severe episodes together, male gender, being single and younger ages were characteristics associated to episodes of violent behaviour. At 1-year follow-up, 149 (77.6%) were reassessed. One hundred twenty (81.6%) had had no psychiatric admissions in the 1-year follow-up, 53.8% of the individuals who abused alcohol at index assessment had stopped using it, and 42.9% maintained the same pattern of index for abuse of illegal or nonprescribed substances. None individual started to smoke last year, and 9 (9.9%) stopped to smoke. Prevalence of substance abuse founded in Cohort study was still lower then the found in international studies, but tobacco use and nicotine addiction were similar to developed countries. The results point to the need of creation and implementation of a bigger and better mental health care system in the community, with a multidisciplinary approach.